A surge of retail stock trading over the last year lit the fuse that sent shares of GameStop rocketing higher without a clear business reason, market watchers say, squeezing hedge funds that had bet against the retailer and other companies that were out of favor on Wall Street

What is going on? Here are some answers 👇

More individuals have invested in stocks during the COVID-19 pandemic, and experts cite a number of reasons, including lockdowns boosted savings, stimulus putting cash into people’s pockets and extremely low interest rates

Also, a proliferation of trading apps allowed anyone with a smartphone to buy or sell stocks for free. Retail investors’ participation in U.S. equity order flows increased to nearly 20% in 2020 from 15% in 2019, data from Swiss bank UBS showed

What has been the impact of this surge in retail trading?

Big U.S. technology companies were among the beneficiaries last year. Facebook, Amazon, Apple, Netflix and Google saw record inflows as their businesses benefited from lockdowns and their stocks soared

💵 With unprecedented stimulus and easy money policies from central banks, investors then shifted to smaller stocks, especially ones that got beaten down during the pandemic

Yesterday, I contemplated life. I thought about how we make plans and wait for the stars to align before finally living. I thought about how we rarely enjoy the fruits of our labour because we learnt to manage while coming up. 🧵

Moving from a scarcity to a prosperity mindset is difficult. It's why we keep reserving things for visitors and keep waiting for vacations before resting. It's why we accept less than ideal love and learn to compromise the sacred.

So, yesterday I decided to do something about the restlessness in my spirit. Something symbolic.

I discovered I typically sleep on only one side of my bed. It's a habit I picked up because I prefer being near the door. I chose to sleep in the middle instead and to "spread out". To use my multiple pillows instead of one.

Rather than start the day in my study, I drank coffee on my balcony, as I gazed at the beautiful mango tree in this thread. I realised there are chairs I've never sat on in my home and so, I sat on them.

My 21 stocks for 2021:

Smallest to largest...
$IRBT
$UPWK
$FVRR
$RDFN
$BYND
$ETSY
$TDOC
$ZG / $Z
$PINS
$ROKU
$MO
$MELI
$ISRG
$SQ
$SE
$PM
$CRM
$DIS
$BRK.B
#Bitcoin
$AMZN

Bonus baskets:
$ARKG
A basket of the @chamath alphabet SPACS ( $SPCE, $OPEN, $IPOC, $IPOD, $IPOE, $IPOF)

iRobot ($IRBT) – Ceiling: So much optionality in home robotics + AI to boost growth. Floor: Premium brand, profitable, good balance sheet.

Upwork ($UPWK) and Fiverr ($FVRR) – Marketplaces that win as freelancing and the gig economy take off. Upwork has more sales now, but Fiverr has more recent growth.

Redfin ($RDFN) and Zillow ($ZG/$Z) – Disrupting traditional real estate agents with optionality to extract value in all aspects of the home buying/selling process.

Beyond Meat ($BYND) – Aggressively building distribution and brand for its plant-based meat (similarly impressed by Impossible Foods, but it’s private). The traditional meat industry is a trillion-dollar space.

How I Trade

Easy. I trade with the trend. Buy low sell high for up trends. Sell high, buy low during down trends. I don’t care about fundamentals. Often I don’t even know what sector the stock is in. Half my trades, don’t even know the name of the company.

I look at the setup. I look for skew. If a few other variables line up. I stalk it for an entry.

Then I use options to maximize my capital. I mitigate the risk with diversification.

How to spot the trend?

Let’s take a look at this chart. Now. Let’s trade it.

I have no idea how. There are no landmarks. It could be going up, or down, maybe sideways. If I have no clue where it’s going. How do I make a plan? Where do I enter? Where is the exit?

Elliott Waves Principle

Now this one. A simple fact. If you see a 1-2 setup. 3 is next. 3 runs fast and hard. Usually between 100% to 161.8% of 1. However if price break down below 2. This trade is invalid. We have to consider an alternative.

Can you manage a trade like this?

How long does it take to learn Elliott Waves?

Months probably years to be an expert in it.

Not that is not going to do you any good eh? Years to master something before making any money.

Education is an investment.

If you're coming to study in Canada, be proactive in choosing a program, especially if you plan to work in Canada

Research and check how relevant your program is

Below are the Top 10 Most Valuable Degrees in Canada according to Royal Bank of Canada.

This ranking is by highest average salaries compared to tuition costs

It is to give info on degrees with good returns on (education) investment

"No matter what program you choose in the end, with careful budgeting, planning & hard work, you can find success in any field." - RBC

1) Business/Management Sciences

The discipline is more tied to math than commerce and will teach students about theories and models in statistics and programming

It will also teach students how to apply the knowledge/skills to a variety of business problems.

This is in demand!

2) Petroleum or Chemical Engineering

They learn about subjects such as fluid mechanics, heat and mass transfer, and process modeling in order to design operations that will transform raw material into specified products for industries (oil and gas, pharmaceuticals, or energy).

3) Finance

Students who specialize in finance will learn how to plan, manage, and analyze the financial aspects of businesses, banks, and other organizations.

They will work as analysts in a variety of financial roles.

After my first reading of the draft EU-UK trade and cooperation agreement, here is a short thread with some initial thoughts:

1) this is a massive and complex document, covering very diverse & highly specialist fields. No single person could ever plausibly claim properly to master/understand it. So I’ve focused on my own (“big picture”) interests. Not, eg the (in fact marginal) details of fishing quotas

2) Let’s start with how draft treaty is being framed by UK Gov & client press. They compare it to “no deal” & thus treat it as some sort of triumph. Well: even on own terms, that is far from accurate: for many sectors, draft treaty is barely better than no deal at all

3) But of course: such UK Gov framing of draft treaty = entirely if sadly typically misleading. Real comparison should be draft treaty versus what UK already enjoyed for 45 years as a Member State of the EU. And judged by that benchmark: Johnson’s proposed deal is truly pathetic

4) Draft treaty gives UK nothing it didn't already enjoy, in relations with EU, as a Member State in its own right. Eg Johnson boasts about “zero tariffs and zero quotas” – even though we had that already for decades and Brexit simply risked throwing even those basic things away

1/ Equity crowdfunding or equity investment marketplaces failed. Full stop. Didn’t work.

Here is my synopsis on why the industry hasn’t taken off. Lots of reflection and painful lessons I hope others can learn from.

2/ Reason #1: The financial feedback loop for vc takes yrs. If you want one core reason the industry has not succeeded, it is this. Time between when an investor writes a check and gets confidence she should write again- is way too long to encourage repeat investment

3/ If you are ever at a YC event and some entrepreneur pitches you on a marketplace that helps private companies raise money…..ask how they will solve this issue.

[imagine being at a cocktail event again?]

4/ I missed this point when we started. Frankly the 60+ investors that passed on us also missed it- or at least it never came up as a key concern. Not once.

The difference between credit, with financial feedback loops that took days or months, and equity is huge.

5/ In private investments it is typically >5 yrs before you see the financial feedback. Win or lose thats a long time for most people. If you’re running a VC fund you’re making $ along the way with management fees, but angel investors….are just shelling out checks.

Finance Vs Economics.https://t.co/FknPKywifs business information.

Starting a house based enterprise and not using a business plan is suicide. Distribution is how you will get your product into the arms of your prospects.

Robinhood sells your orders to Citadel. This controversial practice is known as "payment for order flow."

Like true scumbags, Citadel actually urged the SEC to ban this in 2004.

"Citadel Group urges the Commission to ban payment for order

"This practice distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers."

"Broker-dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers."

"Furthermore, the parties making such payments (either voluntarily or through an exchange-mandated program) are forced to find other ways to recoup the amounts of such payments..."

"...whether through wider spreads or a reduction in other benefits that otherwise could, and should, be provided to customers."

1/ A primer on how I achieved end to end automation via algos.

First up, Why?

Trades execute the moment your setups trigger. No hesitating/panicking/worrying/overthinking when you need to take a new trade daily. That's why. Also, spend less screen time going fwd.

2/ How long for the whole process?

3 to 4 weeks for your easier/easiest strategies if you have some (bare minimum is enough) amount of coding experience. Even basic experience writing loops helps the process.

3/ Honestly tho, like seriously, can we do this in under 4 weeks? Yes, for simple strategies that don't use too many indicators. You can slowly build your other strategies later on once the simpler stuff is up and running.

4/ Costs involved:
- Zerodha API subscription (2k per month).
- Historical data subscription (2k per month). You can unsub after the first month if you don't need it.
- Udemy course (Price keeps changing but it's 490/- right now).
- AWS (Free tier for the first year)

5/ What language?

Python as it is relatively easy with a lot of inbuilt libraries. C++ is better and faster I'm told but it's not like you are running nanosecond HFT strategies with your peasant like retail capital.

As 2020 as 2020 was (no typo here), 2020 was a great year for some investors. If you invested in some stocks, you could have gotten 10 times your money. Crypto got more adoption etc

Going into 2021, the phrase “regression to the mean” has been on my mind. The phrase simply means

that life averages out, or life tends towards a steady average. That is, years of high gains or huge wins are often followed by years of lower ones such that when we look back, growth maintains a steady average

What does this mean? 2021 might not be as great a year for the stock

market and other high-risk investments as 2020 was. It also means that if you’re going into the stock market or buying crypto because you want to double/triple your money in a few months as some people did in 2020, that might not happen.

If you’re looking to invest, do it for

the long term. Don’t take high risk or invest in things you don’t understand. Take your time. Do the research.

“When the student is ready, the teacher will appear” - Lao Tzu
When the time is right, the right opportunity for you will present itself. You just have to prepare

yourself (get ready)

2020 has given some of us a taste of supernormal returns. People were doubling their funds in days/weeks etc. When we see returns like these, it isn’t easy to rate any investment that’s not offering something close to that in a similar time frame

But here’s

That time everyone in Omaha forgot about Berkshire and went crazy for a bubble stock: Level 3 Communications.

Enter Walter Scott, CEO of Kiewit, Omaha's biggest construction company (BRK's offices are at Kiewit Plaza). He and Buffett go way back: "I first got to know Walter when we were teenagers. We both had a crush on the same girl. Walter won her and they ended up getting married."

But seriously, Buffett: "A lot of people like to make simple things complex. Walter does the opposite. He has an ability to cut through what's complicated. He is a man who gives you his word. He is a person of great integrity. People here have tremendous respect for him."

Scott became CEO of Kiewit in 1979. The company had grown big building tunnels, dams, highways. It generated a ton of cash which was reinvested in its "Kiewit Diversified" segment.

A Kiewit executive named James Crowe urged Scott to buy Metropolitan Fiber System which built networks for phone companies.

Crowe renamed it MFS and started building his own networks. It became a competitive local-exchange carrier (CLEC). It spun out and went public in 1993.

To be a good public investor, you don’t need to be a genius or own a crystal ball but you do have to make a few big calls.

2/ In my case, I started in January of 2000, was up 20pct after the first month, and thinking this was pretty easy. Then the nasdaq dropped from 5000 to below 1000. That was a proper wake up call!

3/ I only made 2 big calls in the first 10 years or so but those were enough. If 90pct of your book goes up 8pct/year (historical public returns) and 10pct doubles, then you are up twice as much as the market and that’s a big number as it compounds.

4/ My first big call was recognizing the bubble in 2000. It took me 12 months but I was ready for 2001/2 once I understood how the excessive financing of dot.coms would eventually affect hardware and semiconductor companies. Seeing how the cobweb ties all the players was helpful.

5/ I missed the rally post 2003 but then stumbled on Apple computer in 2007. At the time I was very annoyed because I had dismissed the iPod and the stock had moved from $25 to $100 (or $1 to $4 post 28-1 splits)

Open letter to all S&P 500 benchmarked managers:

On Friday 12/18 at market close, $TSLA will enter the S&P 500 Index at an approximate 1.5% weight - the sixth largest weight in the S&P 500 index after $AAPL, $MSFT, $AMZN, $GOOGL, and $FB.

2/Goldman says 90% of you don’t own $TSLA, and you probably never had much interest in owning it, since it trades at 169x consensus 2021 EPS, and is +665% YTD. Surely you can ignore it for a little longer, and wait for it to come back down to Earth.

That would be a huge mistake.

3/ CNBC talking heads who know nothing about $TSLA have long proclaimed it to be overvalued. Celebrity shorts and sell side analysts who blindly compare it to other auto companies have been wrong about TSLA for years. Investors who I think are smart sound like empty suits...

4/ when they try to explain why $TSLA keeps going up.

I’ll tell you why $TSLA keeps going up, and why it could double again in 2021 (at 1.5% wt, a double will cost you 150 bp performance).

First, EVs will soon replace gas-powered cars, yet EVs today are just 3% of global SAAR.

5/ As with IPhone, once a customer goes EV, he/she never goes back. By 2025, EVs are likely to be 20% of global SAAR. Do the math: 20/3 = 6.7x = 46% CAGR.

Second, $TSLA is by far the global EV market leader, with 25% YTD global EV share. TSLA continues to grow its share...

Things I've learned trading for the past 4 years in no particular order while reflecting this Sunday on it all:

* It always goes higher than you expect it will.

* It always comes back down.

* It is very easy to make money in these markets. It is much harder to keep it.

* You will FOMO no matter how much you say you won't. Make sure you don't FOMO with everything and blow your account.

* You don't need some fancy indicator to be profitable. Get solid with a few (personally for me, Ichimoku and OBV are my favorites)

* Horizontal levels are more reliable than diagonal.

* Trade with friends. They'll tell you when you've fucked up and shame you for it.

* You can follow someone else's TA, but you better be able to tell if they're full of shit or not.

* Risk Management will ultimately lead to your success over time. Luck runs out.

* "As soon as you stop trying to get rich quick, you'll get rich quick."

* Beware of getting sucked into coin communities. They're full of hopium, bag hodlers, and outrageous price predictions. Echo chambers are dangerous.

* Always leave behind a small moon bag. Makes you feel better when it does another 10x.

Running through the public information for @PlugIntoPaysafe $BFT.

I've leveraged available information from @Square $SQ, @NuveiTech $NVEI, and @Paypal $PYPL.

1/25

@MrZackMorris

1/

Get a cup of Bru coffee.

Today I will help you understand a simple implied growth calculator to find a stock buy level. Let's get started.

(A short thread)

2/

As you might know, The value of a stock is the present value of its lifetime cash flows.

For the long term buy and hold investor, the real cash flow from the stock is dividend income over its lifetime.

3/

In 1959, M J Gordon proposed a formula for this. The formula is

Value = D/(r-g)

Whereas

D = Expected dividends.
r = Required rate of return.
g = Dividend growth rate in perpetuity.

A detailed derivation of the formula is given at the end.

4/

Now, let's be honest, it is next to impossible to predict the growth rate in perpetuity for a firm.

So we twist the formula a little bit. Rather than finding out value, we find the *implied growth rate* This helps us to make deals with Mr. Market.

5/

Here is some math:

Value = D/(r-g)

r-g = D/value

D/value is nothing but dividend yield, so we substitute the same.

r-g = Dividend yield

g = r-Dividend yield

*Implied growth = Required rate of return - Dividend yield*